A peptide fraction containing two 28-residue somatostatins, both products of the anglerfish somatostatin II gene, has been isolated, characterized, and subjected to amino acid sequence analysis. The structural data indicate that one of the two forms of the 28-residue peptide contains 5-hydroxylysine. Hydroxylysine was identified in an acid hydrolysate of somatostatin-28 by gas chromatography/mass spectrometry. Fast-atom bombardment mass spectrometry indicated that the two forms of somatostatin-28 have molecular weights of 3220 and 3204, representing the hydroxylated and nonhydroxylated peptides, respectively. The location of the hydroxylated lysine was deduced by analysis of proteolytic fragments to be position 23. This represents the first observation of a hydroxylated peptide hormone and one of the few reported occurrences of hydroxylysine in non-collagen proteins.